NZ Post in $121m loss as mail dips

New Zealand Post’s increasingly important parcels business turned a small annual profit, but that wasn’t enough to avoid red ink with its mail service still in decline.

The state-owned enterprise (SOE) reported a loss of $121 million in the 12 months ended June 30.

The latest period included a $51m impairment charge on the mail service assets, $38m being set aside to cover underpaid holiday pay, and a $15m settlement with ACC and the New Zealand Superannuation Fund over their purchase of 47 per cent of Kiwibank parent, Kiwi Group Holdings.

The mail service posted a loss of $49m on revenue of $376m, compared to a loss of $21m on revenue of $372m a year earlier.

NZ Post’s parcels division was just in the black with a profit of $1m on revenue of $417m, turning around a loss of $9m on revenue of $392m a year earlier.

“Our challenge is to juggle the cost of delivering mail and the reduction in the number of letters being sent, with the high value that New Zealanders place on the mail service,” chair Rodger Finlay said in a statement. “Providing a physical mail service for New Zealanders that meets the needs of both rural and urban New Zealand is part of NZ Post’s DNA — but it must be financially sustainable on its own.”

NZ Post is positioning itself to latch on to e-commerce, saying it completes deliveries for more than half of the 1.8 million New Zealanders who shop online.

The SOE has been reorganising itself over the past five years to cope with the slump in letter volumes. That’s meant changes in delivery schedules, shrinking its processing centres and dropping standalone post stores in favour of outsourcing to agents such as chemists, stationery stores and chemists.

The government eased up on NZ Post this year, letting it retain earnings rather pay a dividend, although the de-recognition of a $59m deferred tax asset contributed to the SOE facing a tax bill of $25m for the year compared to a $17m tax credit in 2018.